CSRC Penalizes Seven Securities Firms for Investment Banking Violations

On July 31, the CSRC publicly released nine regulatory decision letters regarding investment banking business. Together with one bond-trusteeship warning letter disclosed by the Shanghai Securities Regulatory Bureau, a total of seven securities firms were sanctioned: GF Securities, Century Securities, Hongta Securities, Guoyuan Securities, Guorong Securities, Yongxing Securities and Guotai Haitong Securities.

The violations shared prominent common features: many firms' investment banking quality-control and internal-review gates were mere formalities, and inadequate due diligence was a frequent problem. Some institutions also showed governance weaknesses in compensation management, integrity inspections and project material approvals. In addition, bond trustees' failures in ongoing supervision and information-disclosure enforcement continued to expose risks.

GF Securities received a warning letter for issues including insufficient independence of its quality-control department and irregular project charges. Century Securities had lax quality control and internal review and improper compensation management. Hongta Securities showed deficiencies in multiple verification tasks, including inadequate on-site quality-control checks, insufficient disclosure in sponsor work reports and lax acceptance of underlying documents. Guoyuan Securities had inadequate due diligence in underwriting and sponsorship projects, lax quality control and internal review, and incomplete investigation and rectification of integrity issues. Guorong Securities had inadequate due diligence in underwriting and sponsorship projects, lax quality control and internal review, and improper approval management of submitted materials. Yongxing Securities had inadequate due diligence, lax quality control and internal review, and improper compensation management. The CSRC required each firm to strengthen internal control over investment banking and hold relevant responsible personnel internally accountable.

Guoyuan Securities, Guorong Securities and Yongxing Securities were ordered to take corrective measures. The then-heads of investment banking at the three firms were also held accountable: Li Zhoufeng of Guoyuan, Liu Meng of Guorong and Jin Yongxiong of Yongxing each received warning letters, with findings that they bore management negligence for the firms' investment banking violations.

The Shanghai Securities Regulatory Bureau disclosed that Guotai Haitong Securities, as bond trustee for Jingrui Real Estate (Group) Co. , Ltd. , received a warning letter for inadequate ongoing management duties. The violations included insufficient due diligence on the issuer's information-disclosure management system; failure to issue temporary trusteeship management reports in a timely manner and to effectively urge the issuer to fulfil temporary disclosure obligations for major risk events such as changes to supervisors, failure to repay due debts, major litigation, loss of good faith by the actual controller and issuer, and disciplinary action for bond business; distorted annual trusteeship management reports; failure to urge the issuer to standardise disclosure of key information including interest-bearing debt balances, the actual controller's external assets and restricted individual assets; and failure to conduct on-site risk inspections of the issuer's bonds as required. These acts breached relevant provisions of the Measures for the Administration of Corporate Bond Issuance and Trading.

GF Securities has been named by regulators several times recently. A regulatory decision issued by the Shanghai Stock Exchange (SSE) on July 15 showed that from December 2025 to March 2026, multiple GF Securities clients frequently engaged in abnormal trading. After several self-regulatory measures, the same situation reappeared from May to June 2026, prompting the SSE to issue a written warning.

According to GF Securities' official website, the company was founded in 1991 and listed on the Shenzhen Stock Exchange and the Hong Kong Stock Exchange's main board in 2010 and 2015, respectively. As of the end of 2025, the company owned six wholly-owned subsidiaries, including GF Futures Co. and GF Holdings (Hong Kong) Co. , held a controlling stake in GF Fund Management Co. , and held a stake in E Fund Management Co. Its first-quarter 2026 report showed total assets of RMB 1.12 trillion at the end of the quarter.

Century Securities' official website says the company was founded in 1990, formerly known as Jiangxi Securities Company, with headquarters in Qianhai, Shenzhen. It is a state-controlled, full-license securities firm with more than 50 branches nationwide. According to its 2025 corporate bond annual report, the company achieved total operating revenue of RMB 1.204 billion in 2025 and net profit attributable to parent shareholders of RMB 206 million, up 2.04% from 2024. Its total assets at the end of 2025 were RMB 21.785 billion.

Hongta Securities was founded in 2002 and listed on the Shanghai Stock Exchange in 2019. Its controlling shareholder is Yunnan Hehe (Group) Co. , and its actual controller is China National Tobacco Corporation. In the first quarter of 2026, Hongta Securities reported operating revenue of RMB 444 million, net profit attributable to listed shareholders of RMB 196 million, and total assets of RMB 62.267 billion as of the end of the quarter.

The Hebei Securities Regulatory Bureau found that Zhongtian Guofu Securities, in the 2017 non-public issuance of shares by Dongxu Optoelectronics, produced documents including a financial advisory report containing false records, constituting fraudulent issuance. Zhongtian Guofu had RMB 2.8302 million in financial advisory business income confiscated and was fined RMB 14.1509 million, with a six-month suspension of its financial advisory business licence. For underwriting, it had illegal gains of RMB 25.4717 million confiscated and was fined RMB 600,000, for a combined forfeiture and fines of RMB 43.0528 million. The then project leaders, Chen Dongyang and Zhang Jin, were each issued warnings and fined RMB 400,000.